High Court to Hear Patent Case

Justices agree to review appeals court ruling that universities and Obama administration argue would upend system for determining ownership of U.S.-funded inventions.
November 2, 2010

WASHINGTON -- The U.S. Supreme Court on Monday agreed to hear Stanford University’s appeal of a federal appeals court’s 2009 patent ruling against it, as the university and dozens of its peers, several higher education groups, and the Obama administration all had urged.

While the parties put forward slightly varying arguments, they all maintained that the appeals court’s ruling, if left standing, would seriously disrupt the federal government’s 30-year-old system for determining who owns the rights to inventions created using federal funds.

In a ruling last October, the U.S. Court of Appeals for the Federal Circuit had directed a lower court to dismiss a lawsuit Stanford had brought accusing the pharmaceutical company Roche of infringing its patents on a technology that measures the concentration of HIV in blood plasma.

Stanford lost the case, essentially, because its policy on who owns inventions created using university resources required researchers, at some future date, to "agree to assign" ownership rights to the university. Meanwhile, the comparable policy at Cetus, the Roche-owned company with which the Stanford researcher, Mark Holodniy, did outside work, required the inventor to assign his rights to the company immediately. So while a federal district court backed Stanford's lawsuit challenging Roche's patents on the HIV technology, the Federal Circuit court ruled that Stanford had relinquished its rights to the patents because Holodniy had assigned ownership of his rights to Cetus/Roche.

Stanford asked the U.S. Supreme Court to reconsider the Federal Circuit’s decision – and a large number of research universities and higher education associations filed friend of the court briefs asking the justices to hear the case.

So, too, did the Justice Department, in a brief filed in September arguing that the appeals court had erred in ruling, and that the stakes of its mistake were high. The 1980 law known as the Bayh-Dole Act, the solicitor general’s office stated in the federal brief, ended years of confusion over who owned federally financed inventions – confusion that impeded the commercialization of important research – by vesting ownership of such inventions in the universities that contract with the government, not with individual inventors or the government itself.

“The Bayh-Dole Act reflects Congress’s considered judgment about the best way to ensure that federally funded inventions are made available to the public and to encourage further science and technology research and development in the United States,” the U.S. brief argues. “The court of appeals’ decision ignores that judgment and allows the wishes of a single inventor to override the Act’s allocation of rights in federally funded inventions. The funds at issue are substantial: the federal government spends billions of dollars per year on science and technol­ogy research at United States colleges and universities, small businesses, and nonprofit organizations.”

“[I]f not corrected by this court,” the Association of American Universities, the Association of Public and Land-Grant Universities, four other groups and 42 universities said in their own brief, the Federal Circuit court’s decision casts “in doubt the rights of universities and the federal government alike to inventions arising from hundreds of billions of dollars in research. The decision of the court of appeals turns the statutory structure on its head, allowing rights in federally funded patents to be disposed of in obscure private contracts between researchers and third parties rather than according to Congress’s dictates.”

Roche filed its own brief discouraging the Supreme Court from taking the case, saying that Stanford (and by extension its supporters) are reading Bayh-Dole far too expansively. "[T]he Bayh-Dole Act nowhere alters an inventor’s basic freedom to assign his own rights in an invention to a third party," Roche argued.

In siding with Stanford over Roche in agreeing to hear the case Monday, the Supreme Court, as is its custom, did not offer any insights as to why it did so, accepting it with a single line in the court’s orders.

The case (No. 09-1159) is Board of Trustees of Leland Stanford Jr. University v. Roche Molecular Systems.


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